New Irish Budget 2024: What does this mean for you and your business?

Digging into the numbers

You could spend hours digging into the details of this budget, but we’re going to unpack some of the key headlines that will be relevant to employers.

Firstly, there will be an increase of €2,000 to the standard rate cut off point which means earners will not pay the higher rate of tax until they are earning are above €42,000. Likewise, employee and earned income tax credits will see an increase of €100 - e from €1,775 to €1,875 per annum. 

We’ll also see the implementation of the Pillar Two rules, which means there will be an effective minimum corporate tax rate of 15%. More details of this will be discussed in the new Finance Bill, which will be published next week (at the time of writing).

Universal change

The 2% USC threshold will increase by €2,840 per annum changing the threshold ceiling from €22,920 to €25,760.  Alongside this, the rate applied to earnings between €25,760 and €70,044 will be reduced by 0.5% to 4%.

The reduced rate of USC concession for medical card holders earning less than €60,000 per annum will continue for another two years to the end of 2025.

Social Welfare

One of the Government’s key focuses has been relieving some of the pressure on the population   struggling with the cost-of-living crisis. As a result, there are a number of  social welfare measures  to support a range of people.

There will be an across the board increase to social welfare and pension payments of €12 per week, while the State Pension will increase from €265.30 to €277.30. 

Of crucial importance to employers is the fact that maternity, parent and paternity pay will increase from €262 to €274. Illness benefit will also increase from €220 to €232. 

Benefits in kind

There will also be some shifts to benefit in kind (BIK), particularly to encourage the use of electric vehicles as company cars. Critically, the tapering of the preferential BIK relief will be suspended. The existing €35,000 of the original market value will be maintained until 2025.

In addition, the 4000km reduction in the highest mileage band will also continue for another year to the end of 2024.

Employment law

Minimum wage remains a hot button issue, and one that employers need to stay abreast of. There have been numerous high-profile cases where employers have paid their employees less than minimum wage, often due to salary sacrifice. This year, it will see an increase of €1.40 from €11.30 to €12.70 from 1st January 2024. You’ll need to make sure your payroll is up to date to stop employees slipping under the radar. 

Statutory sick leave will increase from 3 days to 5 from 1st January 2024. That means employees will need to be off for five days before they qualify. While that can save you money, it can lead to reduced employee wellbeing and increased absenteeism if employees feel they have no choice but to stay off to qualify, or struggle in when they shouldn’t.

Parent leave and benefits will be increased to nine weeks  from August 2024. The normal rules for parental leave still apply, so this doesn’t necessarily have to be paid leave.

Future plans

PRSI will see an increase of 0.1% to all rates effective from 1st October 2024. It’s also been noted there will likely be further unspecified increases to this for the rest of the decade. This is largely to meet the additional costs of retaining the pension age at 66.

Let's unpack that

Ultimately, there aren’t many surprises to be found here. The focus this year is on relieving cost of living pressures for the average person, while bolstering economic resilience for the rest of the country.

Ireland, like most small open economies is particularly vulnerable to sudden shocks and changes from external forces. These changes will help keep Ireland resilient and competitive with other economies, as the external economic background remains uncertain with high global inflation and interest rates restricting major changes.

Stay on top legislation with MHR

Everyone knows that keeping on top of legislation is one of the most time-consuming jobs for HR, payroll and finance professionals. While new budgets are expected this time of year, it can sometimes feel like if you let your finger off the pulse you’ll be caught short with a fine or worse.

MHR offers a range of solutions that will help you keep on top of changing legislation. Our cloud-based solutions can easily be adjusted to suit the needs of government and industry wide legislation.